The burden of Pakistan’s external debt has increased by approximately Rs. 6 trillion as a result of the depreciation of the Pakistani Rupee (PKR) against the US Dollar (USD) over the last three and a half months.
According to Ministry of Finance sources, the dollar has appreciated by nearly Rs. 45.44 against the rupee during the new coalition government’s tenure. In calculations, this is referred to as a loss, even though additional counterpart rupees must be generated in the due payments following the depreciation.
On 8 March and 10 April, opposition parties filed a No-Confidence Motion in the National Assembly against then-Prime Minister Imran Khan, who was removed from office.
This free fall of the local currency against the dollar has significantly increased the country’s external debt burden during the tenure of the new coalition government. The rupee fell in value due to a delay in the IMF deal, the political situation, global oil prices, and higher external fuel payments.
According to State Bank of Pakistan data, Pakistan’s external debt and liabilities reached $129 billion on March 31, 2022. (SBP). On March 31, the government’s external debt was valued at $100 billion out of total debt and liabilities. During the period, bank external loans totaled $5.8 billion, while public sector enterprise (PSE) loans totaled $7.3 billion. By the end of March 2022, the private sector’s foreign debt stock stood at $11 billion, with debt liabilities to direct investors totaling $4.2 billion.
In terms of the PKR, Pakistan’s total debt stock was Rs. 53 trillion in March, including Rs. 21.54 trillion of government external debt. It is worth noting that the SBP reported an exchange rate of Rs. 183.5 against the USD by the end of March. In rupee terms, this Rs 21.54 trillion is likely to be around Rs 27.54 billion.
However, it increased in value by Rs. 45 after March due to political uncertainty, depreciation of forex reserves as a result of heavy payments, the end of the International Monetary Fund (IMF) loan program, and other factors that triggered the forex market.